North Korea Crisis and Uranium

North Korean Nuclear Testing Fans Fears of Uranium’s Role in Nuclear Proliferation, But Demand for Uranium Fuel Continues to Grow

Weiss Research’s Sean Brodrick Sees Chronic Supply Shortages

JUPITER, Fla., Oct. 11 /PRNewswire/ — Despite fears of nuclear proliferation and the use of highly enriched uranium by rogue nations suchas North Korea, the growing attractiveness of uranium as a fuel source is not diminishing, resulting in chronic shortages of uranium ore that could drive its price higher for at least five more years, predicts Sean Brodrick, a resource analyst for Weiss Research, Inc.

At Weiss Research’s MoneyandMarkets.com, Brodrick writes: “In the past four months, while the lights in the gold and oil markets temporarilydarkened, uranium prices have been glowing — roaring ahead by nearly 26%. The gap between uranium supply and demand is so wide, even major geopolitical shifts are not making a dent in uranium’s long-term bull market.”

Brodrick cites several powerful factors behind this trend:

The worldwide supply-demand gap for uranium will reach an estimated 42 million pounds in 2006.

In terms of the volume used, uranium is thousands of times more efficient than fossil fuels. The energy in one uranium fuel pellet — the size of a fingertip — is the equivalent of 17,000 cubic feet of natural gas, 1,780 pounds of coal, or 149 gallons of oil.

Uranium mine production can’t keep up with demand. Production from world uranium mines now supplies only 62% of the requirements of power utilities.

The supply-demand squeeze could worsen significantly. By 2015 some estimates put uranium oxide demand at 264 million pounds per year — up from 171 million pounds today.

“In the wake of North Korea’s nuclear tests, countries like India may encounter some additional resistance when seeking to buy uranium from sources such as Australia,” comments Brodrick. “But they will not be deterred from their ambitious nuclear construction projects and they can acquire the needed uranium fuel by other means, continuing to help bid up the price of uranium on the world market.”

It is based on these factors and historical trends that Brodrick sees uranium prices continuing to rise until the end of the decade and beyond. “Expressed in today’s dollars, uranium reached a peak of $145 per pound in 1978,” he writes. “In contrast, it recently traded at only $53.25 per pound. So a rise to $70 per pound by the end of next year would not be surprising.”

In a just-released 47-page report, “The Golden Age of Uranium,” Brodrick shows why the uranium bull market is just beginning and recommends several alternative vehicles for investors, including a uranium mutual fund and several mid- and small-cap uranium miners.

Sean Brodrick, a resident resource analyst at MoneyandMarkets.com, has more than 25 years experience as a professional journalist and financial analyst. He is also a contributing columnist to MarketWatch.com and a frequent commentator on one of Canada’s premiere financial websites, HoweStreet.com.

MoneyandMarkets.com, published by Weiss Research, Inc., is a free, daily eNewsletter covering financial and geo-political commentary from Wall Street to Main Street and is read by over 200,000 subscribers.

Weiss Research helps hundreds of thousands of readers and subscribers to its newsletters and books to protect their capital and build their wealth in good times or bad. It prides itself for its foresight in warning Americans of the nation’s most troubling financial times, while steering them to safe havens and profitable investment opportunities.